Apple, Credit Card Firms iPhone 6 'Wallet' Allies?

Apple (AAPL) could be building closer ties to credit-card companies Visa (V), MasterCard (MA), and American Express (AXP) as it readies a move into the mobile payments market with the iPhone 6 launch. Apple's move challenges both e-Bay's (EBAY) PayPal and retail consortium MCX, Morgan Stanley says in a report.

Banks, credit-card networks, wireless phone companies and Web giants such as Google (GOOGL) aim to win over consumers to "digital wallet" payment systems built into mobile phones. Apple's ace in the hole — a database of some 600 million worldwide iTunes users with credit card accounts — will immediately make it a formidable player, analysts say.

MCX — a group of some 60 merchants led by Wal-Mart Stores (WMT) — hope to do away with the credit card transaction fees they pay to American Express, Visa and MasterCard, analysts say. MCX is expected to use an automated clearinghouse system set up by a coalition of banks to debit bank accounts or credit lines.

Apple, expected to release the iPhone 6 this year, may view the credit card networks as potential allies, says Smittipon Srethapramote, a Morgan Stanley analyst. He suggests that the iPhone 6 will feature cloud-based technology to help consumers use existing credit-card accounts.

The technology and business blog StarPoint speculates that Apple may use "token authentication" in the iPhone 6.

Visa and MasterCard have endorsed HCE, or host-card emulation, which stores users' payment information in the cloud rather than in a mobile phone's hardware. Phone companies AT&T (T) and Verizon Communications (VZ) have pushed a method for storing digital IDs within the SIM (subscriber identity module) card in handsets.

Apple Credit Card Firms IPhone 6 Wallet Allies

Apple Credit Card Firms IPhone 6 Wallet Allies

Apple could be planning close ties to credit-card companies if it moves into mobile payments with the iPhone 6 launch.

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Apple's approach may be less threatening to established industry players, Srethapramote says. Recent reports indicate that Apple could use NFC (near-field communications) in the iPhone 6, he explains. NFC is a short-range, wireless communications technology that connects smartphones with payment readers.

"Several news sites (including NFC World) have cited sources that Apple was working with China UnionPay to include an NFC payment application from the latter in Passbook," Srethapramote said. "If true, they would suggest Apple is making significant moves to leverage the card networks' reach to create a unique and wide-ranging payment experience within the next iteration of iOS and the next iPhone model."

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